Do companies end up paying more in currency conversion when incorporated in US, operate outside?

Question

Hey everyone,

One of the problems I have come across is companies incorporated in the US but operating from other countries end up spending a lot money on the currency conversion for ex while paying online for subscription. I am trying to understand if others too have a similar problem and how widespread is it? If you are aware of the situation how are you tackling it currently? I am coming up with a solution but wanted to validate it first. Please reply if you have a feedback for me,

Cheers.

Kalesh Kaladharan · Accepted Answer

I have a company incorporated in US, earnings are in USD and spending is also in USD. Currency conversion has'nt really affected my spending decisions. I think of currency conversion only when I pay myself or any other consultation fees quoted in different currency, which is very rare. Most software services I use charge in USD and I pay them using my US business bank account. So no currency conversion at all.

I understand what you are coming up with. If you are paying USD services using your INR bank account, you will be losing ~3% in currency conversion. I have been on the receiving end many times.

If you are operating in India, you should charge the parent company in US for all the expenses including the currency conversion fees. If parent company doesn't want currency conversion in their balance sheet, then they should get you access to the services thereby eliminating the conversion fees.

So in short, I never felt currency conversion an issue after setting up a USD bank account. You can also open a USD account in your country to avoid currency conversion.